Factors that influence business strategies of direct foreign investments in emerging countries

Abstract

The purpose in this article is to propose an analytical model of the factors that influence business strategies of direct foreign investment in emerging markets. To this end, a literature review was conducted to identify the factors considered relevant to business investment in developing economies. The analytical model was developed on the basis of this review. This model includes external factors (driving mechanisms) and internal factors (leveraging mechanisms). Two dimensions of external factors were identified: macroenvironmental (localization advantages) and micro environmental (internalization advantages). The third dimension, internal factors, is composed of characteristics of the investing firms themselves (proprietary advantages). This model can be applied to the analysis of industries as a whole or to specific industrial segments, in terms of their attractiveness to foreign direct investment.